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FEMA grants, SBA loans: How to get government help to rebuild after a natural disaster

When severe weather strikes, these federal programs can help.

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An increasing number of natural disasters means more reliance on federal assistance. 
Justin Sullivan/Getty Images

This story is part of The Cost of Climate Change, CNET's coverage of how the changing climate impacts a range of financial issues.

As climate change brings severe weather to more regions of the US, a growing number of homeowners and residents are dealing with natural disasters for the first time. If your home or vehicle has been flooded, damaged by hail or set ablaze, there are resources to help.

In the US, the federal government provides various forms of assistance to rebuild homes and restore personal property in the wake of a natural disaster. Some of it comes as grants, which is money you don't have to repay. But most of it comes through loans, which you do have to repay -- with interest.

Here's a breakdown of the major forms of federal assistance programs when recovering from a disaster and what you'll need to apply.

Federal Emergency Management Agency grants

FEMA's disaster assistance programs are designed to aid homeowners "who have uninsured or under-insured necessary expenses and serious needs," according to the agency's website. The Individuals and Household Program, which helps homeowners rebuild both the exterior and interior of their homes, is capped at around $30,000 to $35,000, according to Mark Friedlander, director of corporate communications at the Insurance Information Institute.

Experts suggest not to rely solely on FEMA grants following a natural disaster, however. FEMA grant payouts are "typically well below $10,000," said Friedlander. This, combined with the fact that the grant review and approval process can take a long time, means that homeowners should have other safeguards -- namely, insurance -- in place before a disaster strikes.

"Don't expect FEMA to bail you out from a flood loss or property loss," Friedlander said. "FEMA emergency funds are not a replacement for insurance coverage, for flood insurance or any home loss," Friedlander said.

How to apply for FEMA assistance

Go here to submit an application online. You can also call toll-free at (800) 621-3362 or head to one of FEMA's Disaster Recovery Centers. Here's what you'll need:

  • You must file a claim with your insurance carrier before you can apply to FEMA, so be sure to do that first.
  • Photos of your damaged home and belongings. 
  • A list of the damaged and/or lost personal property.

Small Business Administration Loans

The Small Business Administration also offers funding to homeowners and renters who need help with repairs from damages to their home and personal property.

Despite its small business-focused designation, the SBA is actually the primary source of federal funds for long-term recovery assistance for disaster survivors, according to a FEMA representative. The SBA's low-interest disaster loans offer assistance for disaster damage to private property for homeowners, renters and non-farm businesses of all sizes. 

In contrast to a FEMA grant, the SBA provides loans, which means you'll have to pay this money back with interest. Your interest rate will depend on whether you can secure credit elsewhere, according to the SBA website. If you can get it from a private lender, the interest rate is capped at 8%. If you can't, your interest rate will not exceed 4%.

Note that these loans are available only if your losses are not covered by your insurance or FEMA funding. Homeowners may apply for up to $200,000 to replace or repair their primary residence and up to $40,000 to replace or repair their personal property, including vehicles. 

One thing to keep in mind: If an event is officially designated a natural disaster by the US president or SBA, any loan exceeding $25,000 must be secured with collateral if possible. The SBA also says it "will not decline a loan for lack of collateral," however.

How to apply for SBA loans

Go here to apply for SBA loans. Here's the application and what you'll need:

  • Complete and submit IRS Form 4506-C, which allows the IRS to provide tax return information to the SBA.
  • Real estate tax information.
  • Homeowners and vehicle insurance info and the dollar amount received following a disaster from your insurance carrier.
  • If you changed employment within the past two years, the SBA may request that you must provide a copy of your current pay stub. This information must be provided within seven days of the SBA's request.